Monday, November 25, 2019

There are not 6 million missing female premium wine drinkers

Recently, Wine Intelligence published an article discussing the results of a 2018 survey of "how women differ from men when it comes to the wine category". The article is entitled Missing: 6 million female premium wine drinkers, and was written by Lulie Halstead.

The article starts off quite mildly, with some very sensible ideas, followed by some good data collecting. The data are then explained in terms of possible causes. Then the article finishes by going completely off the rails. The bottom line is expressed as:
Women are significantly under-represented among US wine drinkers who spend $15 or more on a bottle. Could they be the next growth opportunity?
Other people have already commented on this article (eg. Tom Wark: Expensive wines, men v women, and peacock feathers), but I wish to focus on something rather different.

The data involved in the report is discussed like this:
One finding ... was that women generally spend less money on wine than men. This finding held for all 6 markets we studied for the report (US, Canada, UK, Japan, China, Australia), but was especially true in the US market, where the female share of wine drinkers spending over $20 in off premise fell to 35% (vs 50% incidence in the monthly wine drinking population).
Our US Premium Wine Drinkers 2019 report in July also showed this lack of female participation in premium wine in general (defined as typical spend of $15+ in off premise) – at this level, the gender split is a very similar 64% male and 36% female.
So, the data indicate that there are fewer women than men among purchasers of premium wines. To me, that seems quite sensible on the part of the women, since I am generally absent from that end of the wine market, myself. Value for money plummets as value increases, as I have shown many times in this blog (click on the Value for money search link under Labels For Posts at the right of this page). Under these circumstances, I can get some very good wine for $US 12-20, certainly enough to match the amount of wine I drink. So why should I pay more, except for special circumstances?

So, we do not need to look very far for an explanation for the gender imbalance; and Ms Halstead quickly finds it, too:
One clue may come from differing gender attitudes to money in general ... A study of [the] US customer base published in 2018 ... suggested that women were more cautious and sensible with their money, and less tolerant of risky or aggressive investing strategies. A similar study in 2019 among UK private investors also reported very similar findings. Various academics ... have also put forward similar theories regarding men’s impetuousness in spending their disposable income and financial risk-taking.
So, the women are more sensible than the men. Has any woman ever doubted this? Unfortunately, Ms Halstead then concludes:
So in life, so, it appears, in wine. Our US data on wine drinker attitudes consistently shows that, while women appear to know as much about wine as men, they are significantly less confident in that knowledge. As such, they gravitate towards reassurance and safety in their wine choices, and will often opt for a cheaper, tried-and-tested wine over a more expensive and unknown product.
Now, hold on just a cotton-picking minute! It is a long way from wine being <$20 to wine being cheaper. We are talking about value-for-money, not cheapness or untestedness. The conclusion here does not actually match the data (the inference does not follow logically from the premise).

Sadly, it gets worse. The final conclusion is:
So, as we consider the absence of women in the US premium wine consumer base – out of 22 million, 14 million are men, so theoretically to match the monthly wine drinking population we are missing 6 million or so women – it’s clear that we need to work a bit harder to convince my gender that expensive wine is worth buying.
In other words, there are 6 million sensible low-risk-taking money-wise women in the USA who should be actively encouraged to start behaving more like the men, and spend unnecessary amounts of money.

I see this is as being as sexist as anything I have ever heard. Why should we make the women more like the men? Why not, instead, make the men more like the women? If the women are behaving sensibly, as Ms Halstead suggests, then surely the latter would be a much better idea for society as a whole.

It is time for people to stop thinking that men are always the enviable ones. We will never get rid of gender bias, let alone discrimination, if we always see an apparently male-preferred role or behavior as the default, and thereby think that we need to modify an apparently female-preferred role to match it. The men are not necessarily the best role models! Instead, we should think about what sort of society we want to live in, and then try to adjust whichever behavior is at odds with this.

It is totally unsuitable to place marketing dollars (designed to increase alcohol-based profits) ahead of societal good. That is, we should not encourage people to spend more money, when their own behavior currently indicates that they think this is unnecessary. If the wine industry wishes to be seen as a responsible part of society, then it must realize that profiteering is a very different thing from education. Teaching people to value high-quality wines is one thing, but encouraging them to pay excessive money for it is another thing altogether.

I will finish with an alternative, but closely related, example. If you go into any poker room, in any casino or sleazy back-street dive, anywhere in the world, you will immediately notice that >95% of the participants are male. Indeed, gambling is generally carried out by men (but not all men!), with the major exception being the purchase of lottery tickets, which is more gender neutral. Does this really mean that we should be encouraging women to acquire a (potentially financially ruinous) gambling addiction, just to make poker unbiased? I hope not; but I have actually seen this suggested, as well.

Monday, November 18, 2019

The perilous state of the US wine industry?

There has been much talk lately of a slow-down in wine sales in the USA, if not an actual decrease in sales. Indeed, there are similar comments for other wine markets, as well (eg. Wine sales plummet £146m in the on-trade). I thought that it might be worthwhile to look at a picture of some of the data, rather than simply present a few summary details, as occurs in most of these commentaries.

It is simplest to look at the Big Picture, by considering total sales, including all wine shipments from California and the other US states, as well as imports entering US distribution (including bulk imports bottled in the USA). These data are available from Market IQ at the VINEX wine marketplace, covering the years 2002 to 2018, inclusive.

The data for the volume of sales are shown in the first graph. “Table wine” includes all still wines not over 14% alcohol, while “Fortified wine” includes all still wines over 14%, plus sake.

US wine sales by volume 2002-2018

At first glance, all three wine categories show strong upwards trends, suggesting a healthy wine industry. However, all three graphs indicate a recent slow-down in sales — that is, they are all approaching a plateau. Indeed, some simple mathematical modeling of the Table wine category suggests a plateau of c. 353 million 9-liter cases, sometime around 2025.

The plateau implies saturation of the current market. The forecast saturation point is perilously close to the sales of 339 million cases last year, indicating a very small increase in the size of the market over the next half-decade.

This modeling is very simplistic, and it does not actually take into account a possible down-turn in sales (or the creation of some new market possibilities). That is, it is a forecast not a prediction — a forecast is based on the premise “if things continue the way they are currently going”, rather than using a crystal ball.

So, things, indeed, do not look good for those people who want the wine industry to continue growing. If the US population is continuing to grow, then sales of all goods can be expected to grow with it — and the population has been growing at c. 0.65% per year for the past 5 years. The wine industry is currently not keeping pace with the population.

Another aspect to look at is, of course, the total retail value of the wines. Using the same data source, this is shown as the blue line in the next graph. The estimated retail value includes markups by wholesalers, retailers and restaurateurs, for both on-premise and off-premise sales.

US wine sales by value 2002-2018

At first glance, this looks much better, because there is no apparent plateau — sales continue to grow in a nice linear manner, year by year. However, we all know that inflation also tends to make prices do this, irrespective of any actual increase in sales. So, to get a better picture of the real changes in retail value, we need to adjust for inflation, which ran at a yearly average of 2.1% over this same time period (see US Inflation Calculator).

I have shown this adjustment for the pink line. Things doesn't look quite so good, now. Indeed, there have been times when the increase in total wine value did not keep pace with inflation. There is also a small hint of a plateau here, which we might expect from the above graph of sales volume.

A similar pattern is seen if look solely at wine shipments from California, as listed by MarketIQ. Over the same time period, the volume increased by 46% while the value increased 87%.

The difference between the two graphs (volume versus value) is often attributed to premiumisation, which I have discussed before (Has there really been recent premiumization in the wine industry?). That is, drinkers are now allegedly drinking less wine of a higher per-bottle value than did their predecessors. Many commentators seem to think that this is a Good Thing.

However, Damien Wilson has noted out that this is not necessarily so (Is wine premiumisation a doom loop?). He points out that past history, notably in France, shows us that the two things involved in premiumisation (decreasing volume of sales and increasing per-bottle price) counter-act each other unequally, rather than balancing each other. That is, the total value of retail sales decreases through time, so that the wine industry contracts.

He rightly emphasizes that “there is a real risk that the focus on pushing pricing upwards will only end in the market’s downward spiral ... As the number of wine consumers in the US has stalled in recent years, the local wine sector should avoid profiteering in favour of new market investment ... Should wine producers chase short-term profit by pushing prices higher – or is it time to focus on creating more wine consumers for long-term business growth?”

These are wise words, because a healthy industry needs an increase in the actual number of consumers through time; and the current wine industry in the USA does not seem to have this.

Monday, November 11, 2019

You may (not) be surprised which Wine Gourd posts are least popular

As a blog author, I sometimes check on which of my posts are popular and which not. One of my least-popular posts, to date, raises some concerns, at least in my mind, about the wine industry.

Anyway, let’s start with a picture of the 186 posts published up until the end of October. [Note: last week’s post was published at the usual time, but Blogger did not send out emails to subscribers until a day later. Blogger’s email system has generated many complaints from users, over the past couple of months.]

The posts are shown in the graph in chronological order (horizontally), with the number of page-views reported by Blogger vertically (as at 9th November).

Wine Gourd readership by post

Since most of the posts get most of their page-views within a week of being posted, there is no reason to expect that the poorly read posts in this list will acquire too many more readers. It took a while for the blog to get going, so it was a month or so before viewers increased; then there was a slow peak in numbers, after which the number of page-views per post settled down. The 10 earliest posts may never be read!

At the top end of the scale, the most popular posts are listed in the side-bar at the right of this page, so we don't need to discuss them here. My interest here lies in the other end of the scale.

The recent posts that have received fewer than c. 200 page-views are (in rank order):
The first two of these were the Christmas posts for 2018 and 2017, respectively, so maybe that is not unexpected — however, the first one does point out that the the first known commercially produced Christmas card celebrates wine as well as Christmas. The next two posts are somewhat esoteric.

So, the post that I wish to discuss here is the last one in this list. It explores the two current scenarios for online sales of alcohol, in face of the legal requirement that people under a certain age should neither order wine nor receive it.

Some of my correspondents are not at all surprised that this post has been effectively ignored. It addresses a thorny issue for the wine industry, and one that seems to be: (i) ignored by practitioners, and (ii) over-looked by commentators. The wine industry seems not to be overly concerned about the possibility of providing alcohol to minors.

Further discussion

In the interests of continuing my discussion of this topic, below I point out that the wine industry in at least one country has tackled this issue for themselves (ie. without government interference): Australia. I think that the wine industries elsewhere could do a lot worse than trying something similar.

The organization concerned is Retail Drinks Australia Limited, which is the national industry association representing the interests of all off-licensees in Australia (ie. everywhere that supplies alcohol without being licensed to serve alcohol to the public, such as a bar, pub or restaurant).

They have recently produced a detailed document called the Online Alcohol Sale and Delivery Code of Conduct. Below, I quote selected parts of this document; in particular, section 4.1.3 presents a practical way of tackling the legal requirements.
The Retail Drinks Online Code is an industry-wide framework developed in collaboration with government and community to enhance compliance in the responsible online sale and delivery of alcohol ... The Code seeks to address one of the challenges in regulating online alcohol sale and delivery, which is that liquor licensing legislation is state and territory based, but the marketplace is national.
The voluntary industry Code provides a robust, best-practice and fit-for-purpose framework governing the rapidly growing online alcohol sale and delivery market ... The Code covers all points of the direct-to-consumer process involved in online alcohol purchases and deliveries, nationally ... Signatories to the Code cover more than 80 per cent of all alcohol sold online in Australia.
4.1.3 Identification Procedures
    Retailers must adopt adequate procedures in their systems which verify that Customers are aged over 18. For the purposes of this clause, the extent and manner of the adequate procedures can be determined by the Retailer but must include more than only manual date of birth entry (age-check) by the Customer.
    Any person accepting the delivery of alcohol, either the Customer or another adult, is required to provide sufficient identification documents upon accepting a delivery if they appear to look under the age of 25.
Acceptable forms of identification in this instance include:.
  • Australian or Foreign Passport;
  • Australia Post Keypass in Digital iD™ in relevant approved jurisdictions;
  • Australia Post physical Keypass proof of age card;
  • Australian Proof of Age document;
  • Drivers Licence or permit issued by an Australian State or Territory;
  • Drivers Licence issued by a foreign country; and
  • Photo Card issued by a public authority of the Commonwealth or of another State or Territory for the purpose of attesting to a person’s identity and age.
Alcohol industries elsewhere should take note of the entire Code of Conduct, and try something similar for themselves. It may not be easy, but it does seem necessary in the Internet Age.

Monday, November 4, 2019

My annoyances with my alcohol monopoly

The European Union (EU) officially discourages monopolies, but actually bans only commercial ones, not government ones. One of these exceptions that has thus been allowed to stand involves retail sales of alcohol. The Nordic countries have long had government ownership of alcohol sales, and for a good reason, which I will discuss in a future blog post. However, the only alcohol monopoly left in the EU is Systembolaget, in Sweden, although Vinmonopolet continues to operate in Norway (which is not in the EU).

I have written about Systembolaget before, and I recently pointed out its principal advantage — wine is often cheaper than elsewhere in the EU, and sometimes cheaper than in its homeland (Can we trust between-country or between-state comparisons of wine costs?). This has apparently annoyed some of those readers who object to monopolies just on principle.

So, in order to balance things, in this post I will discuss some of my pet peeves about having to deal with Systembolaget. This is just to make it clear that not everything is roses, and also to get my annoyances off my chest (I am glad that you are here to read about it).

The objection to government monopolies is usually that they “manifestly cause waste and inefficiency, while denying consumers the range of price and service options they desire”. I have previously argued that this is not true for Systembolaget: (i) I have pointed out that, as the third biggest alcohol retailer in the world, Systembolaget provides me with a wide range of wines (Wine monopolies, and the availability of wine), and (ii) decent wine is less expensive in Sweden compared to most other places (Why is wine often cheaper in Sweden than elsewhere?).

Any beefs that I have must therefore be about service. Below, I list the five things that have annoyed me over the years.

1. Crazy choices of wine name in the database

A wine database should list the name of the wine, the name of the producer, and the name of the grape-growing region (along with other information, of course). However, Systembolaget is likely to choose something quite arbitrary as the main title for their database entry — some of the staff apparently cannot distinguish between the brand name, the producer name, and the appellation. Sometimes they swap the wine name and the producer name, and sometimes they leave one of them out entirely. Indeed, the largest name on the bottle label may not be the one chosen for the database title, which can be confusing when you are looking for a bottle in a store.

Here is an example of three apple ciders released for sale at the same time. Note that in the third case the brand name and the producer name (Pomologik) have been swapped. This is sadly typical of what the database presents to users.

2. A cavalier attitude to vintages

Systembolaget has an explicit policy not to care about wine vintages. The staff in the store apologize for this, since it is obviously crazy, but there seems to be nothing they can do about it. Anyway, you can imagine the confusion this can cause.

First, the database may list one vintage while the central warehouse supplies a later one, without warning; and the database may not be updated for some time (see below). For example, on 12 September I ordered half-bottles of 10 different wines, and 4 of them had different vintages to what was advertized (two whites were 2017 instead of 2016, one red was 2015 instead of 2014, and one red was 2018 instead on 2015 (!)).

Second, what is available in any given shop may not match either the database or the warehouse, depending on how long the bottles have been in the store. Indeed, the information on the shelf-talkers may not even match what it on the shelf bottles. A fortnight ago I came across two different white wines where the shelf-talkers said 2017 while all of the 20 bottles except one were the 2018 vintage.

Finally, it is entirely likely that the staff will simply shove the bottles of the new vintage in front of the old ones. So, if you look carefully, you will sometimes find old vintages at the back of the shelf. In the white-wine example in the previous paragraph, one of the 2017 bottles was in the back row and one was in the second-back row.

This can create interesting situations, of course. I once ordered a red wine from the warehouse of a particular vintage, and then found two previous vintages of the same wine in my local shop. So, I got to do an interesting 3-vintage comparative tasting, just because Systembolaget does not care about vintages. A similar situation occurred more recently, when I found two Australian rosé vintages (2018 and 2019) — the older vintage was considerably darker, and the aroma considerably more muted, presumably from sitting in the shop for an extra year. It is not all bad (just annoying most of the time).

3. The database is sometimes not up-to-date

There are three main ways this can happen.

The first one is the vintages, as referred to above. The vintage listed in the database may not be the one actually present in any given store. There is only one way to find the vintage you want — go to each store and check every bottle on the shelf.

Second, if there are only a few bottles listed as being present in a particular store, then it is probably a database error. Indeed, if only one store lists a particular wine, then it will definitely be a database error. Do not get your hopes up.

Third, most wines are not actually available in the main warehouse, but are instead stored by the distributor (mostly an importer, of course). This causes an information disconnection — if the distributor does not inform Systembolaget of changes in availability, then the database will be wrong. Things are much better these days, compared to a decade ago, but it can sometimes be a lottery ordering a wine that has to come directly from the distributor.

4. The ordering of “temporary assortment” wines

The Tillfälligt sortiment refers to bottle collections that are released c. 20 times per year (c. 60-90 products per release). This is the assortment from which I get most of my wines, because it is usually here that the interesting stuff appears.

The products are released at precisely 10 am on Fridays, and cannot be ordered beforehand. The products will appear only in a selected few shops, depending on the quantities available, but they can all be ordered from the central warehouse, and will then turn up at my local store a few days later. How long the products remain available after release is determined entirely by the quantities — once they run out, that is it.

Sadly, I usually have to order them, because my local store is not one of the selected few stores where they are available (see below). So I always order within an hour of the release, just to be safe. Obviously, this requirement to order online at a specified moment is a real pain in the butt. However, the only other way to do it is to go to one of the stores that actually has the wine — they are unlikely to run out as fast as the warehouse.

And the warehouse can run out very fast. For example, last September 6 I tried to order one of the 360 bottles of the 2009 Viña Gravonia stated to be available in the warehouse. I clicked the order button literally within the first few seconds after 10 am, but I was still told that the product was now “not available” from the warehouse.

The really annoying part, though, is that even days later there were still bottles of this wine available in all three of the stores where some had been placed. However, I cannot order any of those bottles during the first week after release — I have to go one of the stores; and, of course, after a week (when I could order them) they had all gone.

There must be a better way.

5. My home town is discriminated against

I live in the fourth largest town in Sweden, and the government recently “upgraded” it to city status (due to population size). Systembolaget does not know any of this. This is mostly annoying with regard to the Tillfälligt sortiment referred to above.

First, rare bottles are distributed only to the three largest cities — we get no allocation whatsoever. Second, when the bottles are supplied, we clearly do not get enough for the local populace, because we are always the first place to run out. Therefore, if there is any county without a particular wine, it will be mine. I used to feel that I should be paranoid about this, but I got over it — it is just a fact of life. Occasionally, a town in a nearby county will have what I want, and a 30–45 minute drive will snare me a bottle before it disappears; but this is a ridiculous way to have to do it, even when it works.

It is time for Systembolaget to get into the modern world. If the government can do it, then their monopolies should be able to do it, too.


None of these issues is a deal breaker. They are annoyances and frustrations, but not unendurable. Perhaps it is the price that I have to pay for getting wine more cheaply than elsewhere. If so, then so be it.

Historically, monopolies can be very effective, but they are also known for their abuse of power, and sometimes just sheer laziness. The latter seems to be the case with Systembolaget. However, even within this context they are amateurs compared to one place I worked as a teenager — the TV Times magazine (in Australia), which was the government-owned competitor to the commercial TV Week. What went on there beggars belief; it is no wonder that it folded soon afterwards.